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 ServisFirst Bancshares, Inc. Announces Results for Fourth Quarter of 2017
   Monday, January 22, 2018 4:01:22 PM ET

ServisFirst Bancshares, Inc. (SFBS ), today announced earnings and operating results for the quarter and year ended December 31, 2017.

Fourth Quarter 2017 Highlights:

-- Diluted EPS increased 13.2% from $1.52 to $1.72 year over year, while core diluted EPS increased 17.1% from $1.52 to $1.78

-- Additional tax provision from the revaluation of net deferred tax assets resulting from Tax Cuts and Jobs Act reduced diluted EPS by $0.06 in the fourth quarter of 2017

-- Loans and deposits increased 19% and 12%, respectively, year over year

-- Loans and deposits increased 16% and 20%, respectively, for the fourth quarter on an annualized basis

Tom Broughton, President and CEO, said, "We are pleased to report a year of strong growth in net income and loan and deposit growth. Our business model continues to resonate with our clients because of its focus on service." Bud Foshee, CFO, stated, "We believe we took advantage of tax law changes to the maximum advantage for our stockholders in the fourth quarter of 2017. We also continued our cost control efforts, evidenced by a consistently low efficiency ratio."

FINANCIAL SUMMARY (UNAUDITED)
(in Thousands except share and per share amounts)
                                                     Period Ending       Period Ending        % Change               Period Ending       % Change
                                                     December 31, 2017   September 30, 2017   From Period            December 31, 2016   From Period
                                                                                              Ending                                     Ending
                                                                                              September 30, 2017                         December 31, 2016
                                                                                              to Period                                  to Period
                                                                                              Ending                                     Ending
                                                                                              December 31, 2017                          December 31, 2017
QUARTERLY OPERATING RESULTS
Net Income                                           $     21,150        $      25,259               (16    )%       $     21,738              (3    )%
Net Income Available to Common Stockholders          $     21,119        $      25,259               (16    )%       $     21,714              (3    )%
Diluted Earnings Per Share                           $     0.39          $      0.47                 (17    )%       $     0.40                (3    )%
Return on Average Assets                                   1.20       %         1.55       %                               1.39       %
Return on Average Common Stockholders’ Equity              13.97      %         17.28      %                               16.71      %
Average Diluted Shares Outstanding                         54,161,788           54,099,672                                 53,961,160
Core Net Income*                                     $     24,424        $      25,259               (3     )%       $     21,738              12    %
Core Net Income Available to Common Stockholders*    $     24,393        $      25,259               (3     )%       $     21,714              12    %
Core Diluted Earnings Per Share*                     $     0.45          $      0.47                 (4     )%       $     0.40                13    %
Core Return on Average Assets*                             1.39       %         1.55       %                               1.39       %
Core Return on Average Common Stockholders’ Equity*        16.13      %         17.28      %                               16.71      %
YEAR-TO-DATE OPERATING RESULTS
Net Income                                           $     93,092                                                    $     81,479              14    %
Net Income Available to Common Stockholders          $     93,030                                                    $     81,432              14    %
Diluted Earnings Per Share                           $     1.72                                                      $     1.52                13    %
Return on Average Assets                                   1.43       %                                                    1.42       %
Return on Average Common Stockholders’ Equity              16.37      %                                                    16.63      %
Average Diluted Shares Outstanding                         54,123,957                                                      53,608,372
Core Net Income*                                     $     96,366                                                    $     81,479              18    %
Core Net Income Available to Common Stockholders*    $     96,304                                                    $     81,432              18    %
Core Diluted Earnings Per Share*                     $     1.78                                                      $     1.52                17    %
Core Return on Average Assets*                             1.48       %                                                    1.42       %
Core Return on Average Common Stockholders’ Equity*        16.95      %                                                    16.63      %
BALANCE SHEET
Total Assets                                         $     7,082,384     $      6,712,103            6      %        $     6,370,448           11    %
Loans                                                      5,851,261            5,628,765            4      %              4,911,770           19    %
Non-interest-bearing Demand Deposits                       1,440,326            1,405,965            2      %              1,281,605           12    %
Total Deposits                                             6,091,674            5,796,901            5      %              5,420,311           12    %
Stockholders’ Equity                                       607,604              590,213              3      %              522,889             16    %

* Core measures exclude non-routine expenses during the comparative periods presented in this press release as more fully described in "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below.

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income $21.2 million and net income available to common stockholders of $21.1 million for the quarter ended December 31, 2017, compared to net income and net income available to common stockholders of $21.7 million for the same quarter in 2016. Basic and diluted earnings per common share were $0.40 and $0.39, respectively, for the fourth quarter of 2017, compared to $0.41 and $0.40, respectively, for the fourth quarter of 2016.

In December 2017, we revalued our net deferred tax assets and recorded additional income tax expense of $3.1 million as a result of the reduction in the corporate income tax rate under the recently enacted Tax Cuts and Jobs Act of 2017. We also incurred $347,000 of non-routine expenses associated with moving into our new headquarters building in Birmingham, Alabama. The additional tax provision and non-routine expenses totaled $3.3 million, net of taxes, and are considered non-core components of our earnings in this press release. Excluding such non-core components, core net income and core net income available to common stockholders was $24.4 for the quarter ended December 31, 2017.

Return on average assets was 1.20% and return on average equity was 13.97% for the fourth quarter of 2017, compared to 1.39% and 16.71%, respectively, for the fourth quarter of 2016. Core return on average assets was 1.39% and core return on average equity was 16.13% for the fourth quarter of 2017.

Net interest income was $61.4 million for the fourth quarter of 2017, compared to $58.4 million for the third quarter of 2017 and $49.1 million for the fourth quarter of 2016. The net interest margin in the fourth quarter of 2017 was 3.66%, a decrease of 11 basis points from the third quarter of 2017 and an increase of 36 basis points from the fourth quarter of 2016. The decrease in net interest income on a linked quarter basis is attributable to a $224.5 million increase in excess liquidity and a five basis point increase in average rates paid on deposits.

The Company’s held-to-maturity investment portfolio was transferred to available-for-sale during the fourth quarter of 2017 to provide the Company more flexibility managing its portfolio.

Average loans for the fourth quarter of 2017 were $5.72 billion, an increase of $276.8 million, or 5%, over average loans of $5.44 billion for the third quarter of 2017, and an increase of $1.01 billion, or 22%, over average loans of $4.70 billion for the fourth quarter of 2016.

Average total deposits for the fourth quarter of 2017 were $6.03 billion, an increase of $502.6 million, or 9%, over average total deposits of $5.53 billion for the third quarter of 2017, and an increase of $761.7 million, or 14%, over average total deposits of $5.27 billion for the fourth quarter of 2016.

Non-performing assets to total assets were 0.25% for the fourth quarter of 2017, a decrease of three basis points compared to 0.28% for the third quarter of 2017 and a decrease of nine basis points compared to 0.34% for the fourth quarter of 2016. Net credit charge-offs to average loans for the fourth quarter of 2017 were 0.56%, a 46 basis point increase compared to 0.10% for the third quarter of 2017 and a 47 basis point increase compared to 0.09% for the fourth quarter of 2016. Net credit charge-offs to average loans for the year ended December 31, 2017 were 0.29% compared to 0.11% in 2016. The increase in net credit charge-offs for the fourth quarter and full year of 2017 was primarily attributable to a $5.8 million charge-off on one commercial relationship. Accordingly, we recorded a $9.1 million provision for loan losses in the fourth quarter of 2017 compared to $4.8 million in the third quarter of 2017 and $4.1 million in the fourth quarter of 2016. The allowance for loan losses as a percentage of total loans was 1.02% at December 31, 2017 compared to 1.04% at September 30, 2017 and 1.06% at December 31, 2016. In management’s opinion, the allowance is adequate and was determined by consistent application of ServisFirst Bank’s methodology for calculating its allowance for loan losses.

Non-interest income for the fourth quarter of 2017 was $4.9 million, a decrease of $1.1 million, or 18%, from the fourth quarter of 2016. During the fourth quarter of 2016 we recognized a $1.3 million gain on the sale of fixed assets. Service charges on deposit accounts increased $124,000 while mortgage banking revenue decreased by approximately $150,000 in the fourth quarter of 2017 compared to the fourth quarter of 2016. Credit card income increased approximately $246,000, or 23%, during the fourth quarter of 2017 compared to the fourth quarter of 2016. Purchases on credit cards increased by 36% year over year.

Non-interest expense for the fourth quarter of 2017 decreased $782,000, or 4%, to $21.3 million from $22.0 million in the fourth quarter of 2016, and decreased $242,000, or 1%, on a linked quarter basis. Salary and benefit expense for the fourth quarter of 2017 increased $235,000, or 2%, to $11.4 million from $11.2 million in the fourth quarter of 2016, and decreased $1.0 million, or 8%, on a linked quarter basis. The linked-quarter decrease resulted from a $786,000 reversal of incentive bonuses accrued during the first three quarters of 2017. Equipment and occupancy expense decreased $311,000, or 16%, to $1.6 million for the fourth quarter of 2017 compared to $1.9 million for the fourth quarter of 2016. We accelerated depreciation on our remaining tenant improvements of our previous headquarters building in Birmingham starting at the beginning of 2016 up to June of 2017 in anticipation of our move to our new headquarters building. Professional service expenses decreased by $225,000, or 21%, to $833,000 for the fourth quarter of 2017 compared to $1.1 million for the fourth quarter of 2016, a result of lower legal expenses. Other operating expense for the fourth quarter of 2017 decreased $508,000, or 7%, to $6.2 million from $6.7 million in the fourth quarter of 2016. Included in the fourth quarter of 2016 other operating expense is a $1.2 million write-down of a tax credit investment.

Income tax expense increased $7.6 million to $14.9 million in the fourth quarter of 2017, compared to $7.3 million in the fourth quarter of 2016. We recognized $3.1 million of additional tax expense as a result of revaluing our net deferred tax assets as of December 31, 2017 in connection with the Tax Cuts and Jobs Act passed into law in December 2017. We also recognized a $2.5 million federal tax credit during the fourth quarter of 2016. We recognized excess tax benefits from the exercise and vesting of stock options and restricted stock of $351,000 in the fourth quarter of 2017, compared to $54,000 in the fourth quarter of 2016.

Final financial results and other disclosures will be reported in our Annual Report on Form 10-K for the year ended December 31, 2017, and may differ materially from the results and disclosures in this press release due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

We recorded $3.1 million of additional tax expense as a result of revaluing our net deferred tax assets at December 31, 2017 due to lower corporate income tax rates provided by the Tax Cuts and Jobs Act passed into law in December 2017. We also recorded expenses of $347,000 related to terminating the lease agreement on our previous headquarters building in Birmingham, Alabama and expenses of moving into our new headquarters building. Core financial measures included in this press release are "core net income," "core net income available to common stockholders," "core diluted earnings per share," "core return on average assets," and "core return on average common stockholders’ equity." Each of these five core financial measures excludes the impact of the non-routine expenses attributable to our net deferred tax asset revaluation, lease termination and moving expenses, and are all considered non-GAAP financial measures. In addition to these financial measures adjusting for non-routine expenses, this press release contains certain non-GAAP financial measures, including tangible common stockholders’ equity, total tangible assets, tangible book value per share and tangible common equity to total tangible assets, each of which excludes goodwill and core deposit intangibles associated with our acquisition of Metro Bancshares, Inc. in January 2015. We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that these non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies, including those in our industry, use. The following reconciliation tables provide a more detailed analysis of the non-GAAP financial measures as of and for the comparative periods presented in this press release. Dollars are in thousands, except share and per share data.

                                                                        Three Months Ended   Year Ended
                                                                        December 31, 2017    December 31, 2017
Return on average assets - GAAP                                                1.20       %        1.43       %
Net income - GAAP                                                       $      21,150        $     93,092
                     Adjustments:
                     Revaluation of net deferred tax assets                    3,059               3,059
                     Lease termination and moving expenses                     347                 347
                                          Tax (benefit) of adjustments         (132)               (132)
Core net income - non-GAAP*                                             $      24,424        $     96,366
Average assets                                                          $      6,988,731     $     6,495,067
Core return on average assets - non-GAAP*                                      1.39       %        1.48       %
Return on average common stockholders’ equity - GAAP                           13.97      %        16.37      %
Net income available to common stockholders - GAAP                      $      21,119        $     93,030
                     Adjustments:
                     Revaluation of net deferred tax assets                    3,059               3,059
                     Lease termination and moving expenses                     347                 347
                                          Tax (benefit) of adjustments         (132)               (132)
Core net income available to common stockholders - non-GAAP*            $      24,393        $     96,304
Average common stockholders’ equity                                     $      599,947       $     568,228
Core return on average common stockholders’ equity - non-GAAP*                 16.13      %        16.95      %
Diluted earnings per share - GAAP                                       $      0.39          $     1.72
Weighted average shares outstanding, diluted - GAAP                            54,161,788          54,123,957
Core diluted earnings per share - non-GAAP*                             $      0.45          $     1.78
                                                                             At December 31, 2017  At September 30, 2017  At June 30, 2017   At March 31, 2017  At December 31, 2016
Book value per share - GAAP                                                  $      11.47          $       11.14          $     10.72        $     10.32        $      9.93
Total common stockholders’ equity - GAAP                                            607,604                590,213              567,086            545,148             522,889
                    Adjustments:
                    Adjusted for goodwill and core deposit intangible asset         14,719                 14,787               14,855             14,924              14,996
Tangible common stockholders’ equity - non-GAAP                              $      592,885        $       575,426        $     552,231      $     530,224      $      507,893
Tangible book value per share - non-GAAP                                     $      11.19          $       10.86          $     10.44        $     10.04        $      9.65
Stockholders’ equity to total assets - GAAP                                         8.58      %            8.79      %          8.96      %        8.60      %         8.21      %
Total assets - GAAP                                                          $      7,082,384      $       6,712,103      $     6,329,599    $     6,336,165    $      6,370,448
                    Adjustments:
                    Adjusted for goodwill and core deposit intangible asset         14,719                 14,787               14,855             14,924              14,996
Total tangible assets - non-GAAP                                             $      7,067,665      $       6,697,316      $     6,314,744    $     6,321,241    $      6,355,452
Tangible common equity to total tangible assets - non-GAAP                          8.39      %            8.59      %          8.75      %        8.39      %         7.99      %

* Core measures exclude non-routine expenses during the comparative periods presented in this press release as more fully described in "GAAP Reconciliation and Management Explanation on Non-GAAP Financial Measures" above.

Conference Call

ServisFirst Bancshares, Inc. will host a live audio webcast to discuss earnings and results on Monday, January 22, 2018 beginning at 5:15 p.m. ET. You may access the webcast at https://services.choruscall.com/links/sfbs180122.html. The webcast will be available until February 2, 2018.

About ServisFirst Bancshares, Inc.

ServisFirst Bancshares, Inc. is a bank holding company based in Birmingham, Alabama. Through its subsidiary ServisFirst Bank, ServisFirst Bancshares, Inc. provides business and personal financial services from locations in Birmingham, Huntsville, Montgomery, Mobile and Dothan, Alabama, Pensacola and Tampa Bay, Florida, Atlanta, Georgia, Charleston, South Carolina and Nashville, Tennessee.

ServisFirst Bancshares, Inc. files periodic reports with the U.S. Securities and Exchange Commission (SEC). Copies of its filings may be obtained through the SEC’s website at www.sec.gov or at www.servisfirstbancshares.com.

Statements in this press release that are not historical facts, including, but not limited to, statements concerning future operations, results or performance, are hereby identified as "forward-looking statements" for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The words "believe," "expect," "anticipate," "project," "plan," "intend," "will," "would," "might" and similar expressions often signify forward-looking statements. Such statements involve inherent risks and uncertainties. ServisFirst Bancshares, Inc. cautions that such forward-looking statements, wherever they occur in this press release or in other statements attributable to ServisFirst Bancshares, Inc., are necessarily estimates reflecting the judgment of ServisFirst Bancshares, Inc.’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Such forward-looking statements should, therefore, be considered in light of various factors that could affect the accuracy of such forward-looking statements, including: general economic conditions, especially in the credit markets and in the Southeast; the performance of the capital markets; changes in interest rates, yield curves and interest rate spread relationships; changes in accounting and tax principles, policies or guidelines; changes in legislation or regulatory requirements; changes in our loan portfolio and the deposit base; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, economic stimulus initiatives; the cost and other effects of legal and administrative cases and similar contingencies; possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans and the value of collateral; the effect of natural disasters, such as hurricanes and tornados, in our geographic markets; and increased competition from both banks and non-bank financial institutions. The foregoing list of factors is not exhaustive. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to "Cautionary Note Regarding Forward-looking Statements" and "Risk Factors" in our most recent Annual Report on Form 10-K and our other SEC filings. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained herein. Accordingly, you should not place undue reliance on any forward-looking statements, which speak only as of the date made. ServisFirst Bancshares, Inc. assumes no obligation to update or revise any forward-looking statements that are made from time to time.

More information about ServisFirst Bancshares, Inc. may be obtained over the Internet at www.servisfirstbancshares.com or by calling (205) 949-0302.

Contact: ServisFirst Bank

Davis Mange (205) 949-3420

dmange@servisfirstbank.com

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands except share and per share data)
                                                      4th Quarter 2017     3rd Quarter 2017     2nd Quarter 2017     1st Quarter 2017     4th Quarter 2016
CONSOLIDATED STATEMENT OF INCOME
Interest income                                       $      72,060        $      67,641        $      63,538        $      59,517        $      56,200
Interest expense                                             10,652               9,245                7,971                7,465                7,091
Net interest income                                          61,408               58,396               55,567               52,052               49,109
Provision for loan losses                                    9,055                4,803                4,381                4,986                4,075
Net interest income after provision for loan losses          52,353               53,593               51,186               47,066               45,034
Non-interest income                                          4,905                4,790                4,805                4,546                6,039
Non-interest expense                                         21,255               21,497               21,875               21,267               22,037
Income before income tax                                     36,003               36,886               34,116               30,345               29,036
Provision for income tax                                     14,853               11,627               9,952                7,826                7,298
Net income                                                   21,150               25,259               24,164               22,519               21,738
Preferred stock dividends                                    31                   -                    31                   -                    24
Net income available to common stockholders           $      21,119        $      25,259        $      24,133        $      22,519        $      21,714
Earnings per share - basic                            $      0.40          $      0.48          $      0.46          $      0.43          $      0.41
Earnings per share - diluted                          $      0.39          $      0.47          $      0.45          $      0.42          $      0.40
Average diluted shares outstanding                           54,161,788           54,099,672           54,100,604           54,133,722           53,961,160
CONSOLIDATED BALANCE SHEET DATA
Total assets                                          $      7,082,384     $      6,712,103     $      6,329,599     $      6,336,165     $      6,370,448
Loans                                                        5,851,261            5,628,765            5,343,688            5,151,984            4,911,770
Debt securities                                              538,330              522,724              518,065              526,023              484,939
Non-interest-bearing demand deposits                         1,440,326            1,405,965            1,373,353            1,292,440            1,281,605
Total deposits                                               6,091,674            5,796,901            5,394,810            5,361,532            5,420,311
Borrowings                                                   64,832               54,975               55,075               55,169               55,262
Stockholders’ equity                                  $      607,604       $      590,213       $      567,086       $      545,148       $      522,889
Shares outstanding                                           52,992,586           52,970,310           52,909,362           52,812,396           52,636,896
Book value per share                                  $      11.47         $      11.14         $      10.72         $      10.32         $      9.93
Tangible book value per share (1)                     $      11.19         $      10.86         $      10.44         $      10.04         $      9.65
SELECTED FINANCIAL RATIOS
Net interest margin                                          3.66       %         3.77       %         3.77       %         3.53       %         3.30       %
Return on average assets                                     1.20       %         1.55       %         1.55       %         1.45       %         1.39       %
Return on average common stockholders’ equity                13.97      %         17.28      %         17.36      %         17.09      %         16.71      %
Efficiency ratio                                             32.05      %         34.02      %         36.23      %         37.58      %         39.96      %
Non-interest expense to average earning assets               1.26       %         1.38       %         1.47       %         1.43       %         1.46       %
CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets         9.51       %         9.60       %         9.72       %         9.67       %         9.78       %
Tier 1 capital to risk-weighted assets                       9.52       %         9.61       %         9.73       %         9.68       %         9.78       %
Total capital to risk-weighted assets                        11.52      %         11.51      %         11.67      %         11.66      %         11.84      %
Tier 1 capital to average assets                             8.51       %         8.91       %         8.88       %         8.46       %         8.22       %
Tangible common equity to total tangible assets (1)          8.39       %         8.59       %         8.75       %         8.39       %         7.99       %
(1) See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" for a discussion of these Non-GAAP financial measures.
(2) Regulatory capital ratios for most recent period are preliminary.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
                                                                                                                                       December 31, 2017  December 31, 2016  % Change
ASSETS
Cash and due from banks                                                                                                                $     86,213       $     56,855       52   %
Interest-bearing balances due from depository institutions                                                                                   151,849            566,707      (73  )%
Federal funds sold                                                                                                                           239,524            160,435      49   %
                       Cash and cash equivalents                                                                                             477,586            783,997      (39  )%
Available for sale debt securities, at fair value                                                                                            538,080            422,375      27   %
Held to maturity debt securities (fair value of $250 and $63,302 at
                       December 31, 2017 and 2016, respectively)                                                                             250                62,564       (100 )%
Restricted equity securities                                                                                                                 1,034              1,024        1    %
Mortgage loans held for sale                                                                                                                 4,459              4,675        (5   )%
Loans                                                                                                                                        5,851,261          4,911,770    19   %
Less allowance for loan losses                                                                                                               (59,406   )        (51,893   )  14   %
                       Loans, net                                                                                                            5,791,855          4,859,877    19   %
Premises and equipment, net                                                                                                                  58,900             40,314       46   %
Goodwill and other identifiable intangible assets                                                                                            14,719             14,996       (2   )%
Other assets                                                                                                                                 195,501            180,626      8    %
                       Total assets                                                                                                    $     7,082,384    $     6,370,448    11   %
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
                       Non-interest-bearing                                                                                            $     1,440,326    $     1,281,605    12   %
                       Interest-bearing                                                                                                      4,651,348          4,138,706    12   %
                                                              Total deposits                                                                 6,091,674          5,420,311    12   %
Federal funds purchased                                                                                                                      301,797            355,944      (15  )%
Other borrowings                                                                                                                             64,832             55,262       17   %
Other liabilities                                                                                                                            16,477             16,042       3    %
                       Total liabilities                                                                                                     6,474,780          5,847,559    11   %
Stockholders’ equity:
                       Preferred stock, Series A Senior Non-Cumulative Perpetual, par value $0.001
                                                              (liquidation preference $1,000), net of discount; no shares authorized,
                                                              no shares issued or outstanding at December 31, 2017 and 2016                  -                  -            -    %
                       Preferred stock, par value $0.001 per share; 1,000,000 shares authorized and
                                                              undesignated at December 31, 2017 and 2016                                     -                  -            -    %
                       Common stock, par value $0.001 per share; 100,000,000 shares authorized;
                                                              52,992,586 shares issued and outstanding at December 31, 2017 and
                                                              52,636,896 shares issued and outstanding at December 31, 2016                  53                 53           -    %
                       Additional paid-in capital                                                                                            217,693            215,932      1    %
                       Retained earnings                                                                                                     389,597            307,151      27   %
                       Accumulated other comprehensive income                                                                                (241      )        (624      )  (61  )%
                       Noncontrolling interest                                                                                               502                377          33   %
                                                              Total stockholders’ equity                                                     607,604            522,889      16   %
                       Total liabilities and stockholders’ equity                                                                      $     7,082,384    $     6,370,448    11   %
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
                                                                  Three Months Ended December 31, Year Ended December 31,
                                                                  2017             2016           2017         2016
Interest income:
             Interest and fees on loans                           $       67,357   $      52,533  $   246,682  $   200,463
             Taxable securities                                           2,468           1,604       9,117        5,343
             Nontaxable securities                                        702             785         2,948        3,300
             Federal funds sold                                           508             377         1,693        1,007
             Other interest and dividends                                 1,025           901         2,316        2,789
             Total interest income                                        72,060          56,200      262,756      212,902
Interest expense:
             Deposits                                                     8,954           5,817       28,831       20,169
             Borrowed funds                                               1,698           1,274       6,502        5,636
             Total interest expense                                       10,652          7,091       35,333       25,805
             Net interest income                                          61,408          49,109      227,423      187,097
Provision for loan losses                                                 9,055           4,075       23,225       13,398
             Net interest income after provision for loan losses          52,353          45,034      204,198      173,699
Non-interest income:
             Service charges on deposit accounts                          1,499           1,375       5,702        5,355
             Mortgage banking                                             894             1,044       3,835        3,725
             Credit card income                                           1,298           1,052       4,815        3,207
             Securities gains (losses)                                    -               -           -            (3      )
             Increase in cash surrender value life insurance              797             745         3,131        2,794
             Other operating income                                       417             1,823       1,563        3,034
             Total non-interest income                                    4,905           6,039       19,046       18,112
Non-interest expense:
             Salaries and employee benefits                               11,432          11,197      47,604       43,955
             Equipment and occupancy expense                              1,566           1,877       8,018        7,985
             Professional services                                        833             1,058       3,217        3,977
             FDIC and other regulatory assessments                        1,030           1,072       3,918        3,400
             Other real estate owned expense                              160             91          323          759
             Other operating expense                                      6,234           6,742       22,814       20,917
             Total non-interest expense                                   21,255          22,037      85,894       80,993
             Income before income tax                                     36,003          29,036      137,350      110,818
Provision for income tax                                                  14,853          7,298       44,258       29,339
             Net income                                                   21,150          21,738      93,092       81,479
             Dividends on preferred stock                                 31              24          62           47
             Net income available to common stockholders          $       21,119   $      21,714  $   93,030   $   81,432
Basic earnings per common share                                   $       0.40     $      0.41    $   1.76     $   1.55
Diluted earnings per common share                                 $       0.39     $      0.40    $   1.72     $   1.52
LOANS BY TYPE (UNAUDITED)
(In thousands)
                                               4th Quarter 2017    3rd Quarter 2017    2nd Quarter 2017    1st Quarter 2017    4th Quarter 2016
Commercial, financial and agricultural         $        2,279,366  $        2,223,910  $        2,123,498  $        2,061,503  $        1,982,267
Real estate - construction                              580,874             467,838             395,398             345,777             335,085
Real estate - mortgage:
                    Owner-occupied commercial           1,328,666           1,323,383           1,272,659           1,262,578           1,171,719
                    1-4 family mortgage                 603,063             593,180             565,121             554,261             536,805
                    Other mortgage                      997,079             962,690             931,788             872,955             830,683
Subtotal: Real estate - mortgage                        2,928,808           2,879,253           2,769,568           2,689,794           2,539,207
Consumer                                                62,213              57,764              55,224              54,910              55,211
Total loans                                    $        5,851,261  $        5,628,765  $        5,343,688  $        5,151,984  $        4,911,770
SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
                                                            4th Quarter 2017 3rd Quarter 2017  2nd Quarter 2017  1st Quarter 2017  4th Quarter 2016
Allowance for loan losses:
Beginning balance                                           $      58,459    $     55,059      $     53,892      $     51,893      $     48,933
Loans charged off:
       Commercial, financial and agricultural                      7,064           924               3,067             2,855             1,059
       Real estate - construction                                  -               16                40                -                 -
       Real estate - mortgage                                      1,134           550               106               266               45
       Consumer                                                    137             65                33                75                82
                      Total charge offs                            8,335           1,555             3,246             3,196             1,186
Recoveries:
       Commercial, financial and agricultural                      64              67                16                190               10
       Real estate - construction                                  126             12                14                16                12
       Real estate - mortgage                                      26              59                2                 2                 46
       Consumer                                                    11              14                -                 1                 3
                      Total recoveries                             227             152               32                209               71
       Net charge-offs                                             8,108           1,403             3,214             2,987             1,115
       Provision for loan losses                                   9,055           4,803             4,381             4,986             4,075
       Ending balance                                       $      59,406    $     58,459      $     55,059      $     53,892      $     51,893
       Allowance for loan losses to total loans                    1.02   %        1.04   %          1.03   %          1.05   %          1.06   %
       Allowance for loan losses to total average
                      loans                                        1.04   %        1.07   %          1.05   %          1.08   %          1.10   %
       Net charge-offs to total average loans                      0.56   %        0.10   %          0.25   %          0.24   %          0.09   %
       Provision for loan losses to total average
                      loans                                        0.63   %        0.35   %          0.34   %          0.40   %          0.34   %
       Nonperforming assets:
                      Nonaccrual loans                      $      10,765    $     12,356      $     9,963       $     12,084      $     10,624
                      Loans 90+ days past due and accruing         60              2,506             1,016             16                6,263
                      Other real estate owned and
                      repossessed assets                           6,701           3,888             3,891             5,102             4,988
       Total                                                $      17,526    $     18,750      $     14,870      $     17,202      $     21,875
       Nonperforming loans to total loans                          0.19   %        0.26   %          0.21   %          0.23   %          0.34   %
       Nonperforming assets to total assets                        0.25   %        0.28   %          0.23   %          0.27   %          0.34   %
       Nonperforming assets to earning assets                      0.25   %        0.29   %          0.24   %          0.28   %          0.35   %
       Reserve for loan losses to nonaccrual loans                 551.84 %        473.12 %          552.63 %          445.98 %          488.45 %
       Restructured accruing loans                          $      16,919    $     12,700      $     12,716      $     536         $     558
       Restructured accruing loans to total loans                  0.29   %        0.23   %          0.24   %          0.01   %          0.01   %
       TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
       (In thousands)
                                                            4th Quarter 2017 3rd Quarter 2017  2nd Quarter 2017  1st Quarter 2017  4th Quarter 2016
       Beginning balance:                                   $      16,354    $     16,370      $     7,269       $     7,292       $     6,738
                      Additions                                    4,233           -                 12,716            -                 -
                      Removal from TDR                             -               -                 (535   )          -                 -
                      Net (paydowns) / advances                    (15    )        (16    )          (1,380 )          (23    )          554
                      Charge-offs                                  -               -                 (1,700 )          -                 -
                                                            $      20,572    $     16,354      $     16,370      $     7,269       $     7,292
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
                                                                 4th Quarter 2017   3rd Quarter 2017   2nd Quarter 2017   1st Quarter 2017   4th Quarter 2016
Interest income:
            Interest and fees on loans                           $        67,357    $        63,857    $        59,912    $        55,556    $        52,533
            Taxable securities                                            2,468              2,288              2,274              2,087              1,604
            Nontaxable securities                                         702                729                752                765                785
            Federal funds sold                                            508                379                287                519                377
            Other interest and dividends                                  1,025              388                313                590                901
            Total interest income                                         72,060             67,641             63,538             59,517             56,200
Interest expense:
            Deposits                                                      8,954              7,574              6,321              5,982              5,817
            Borrowed funds                                                1,698              1,671              1,650              1,483              1,274
            Total interest expense                                        10,652             9,245              7,971              7,465              7,091
            Net interest income                                           61,408             58,396             55,567             52,052             49,109
Provision for loan losses                                                 9,055              4,803              4,381              4,986              4,075
            Net interest income after provision for loan losses           52,353             53,593             51,186             47,066             45,034
Non-interest income:
            Service charges on deposit accounts                           1,499              1,467              1,382              1,354              1,375
            Mortgage banking                                              894                978                1,064              899                1,044
            Credit card income                                            1,298              1,149              1,189              1,179              1,052
            Increase in cash surrender value life insurance               797                825                785                724                745
            Other operating income                                        417                371                385                390                1,823
            Total non-interest income                                     4,905              4,790              4,805              4,546              6,039
Non-interest expense:
            Salaries and employee benefits                                11,432             12,428             12,031             11,713             11,197
            Equipment and occupancy expense                               1,566              1,947              2,265              2,250              1,877
            Professional services                                         833                805                808                771                1,058
            FDIC and other regulatory assessments                         1,030              810                1,081              997                1,072
            Other real estate owned expense                               160                31                 56                 76                 91
            Other operating expense                                       6,234              5,476              5,634              5,460              6,742
            Total non-interest expense                                    21,255             21,497             21,875             21,267             22,037
            Income before income tax                                      36,003             36,886             34,116             30,345             29,036
Provision for income tax                                                  14,853             11,627             9,952              7,826              7,298
            Net income                                                    21,150             25,259             24,164             22,519             21,738
            Dividends on preferred stock                                  31                 -                  31                 -                  24
            Net income available to common stockholders          $        21,119    $        25,259    $        24,133    $        22,519    $        21,714
Basic earnings per common share                                  $        0.40      $        0.48      $        0.46      $        0.43      $        0.41
Diluted earnings per common share                                $        0.39      $        0.47      $        0.45      $        0.42      $        0.40
AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)
                                                              4th Quarter 2017             3rd Quarter 2017             2nd Quarter 2017              1st Quarter 2017                4th Quarter 2016
                                                              Average Balance    Yield /   Average Balance    Yield /   Average Balance    Yield /    Average Balance    Yield /      Average Balance    Yield /
                                                                                 Rate                         Rate                         Rate                          Rate                            Rate
Assets:
Interest-earning assets:
        Loans, net of unearned income (1)
                  Taxable                                     $       5,680,227  4.68 %    $       5,407,109  4.66 %    $       5,192,812  4.60  %    $     4,976,933    4.50    %    $       4,676,565  4.45 %
                  Tax-exempt (2)                                      36,992     4.95              33,357     5.17              41,143     4.92             27,322       4.72                 26,344     4.74
                             Total loans, net of
                                        unearned income               5,717,219  4.68              5,440,466  4.66              5,233,955  4.60             5,004,255    4.51                 4,702,909  4.45
        Mortgage loans held for sale                                  6,199      3.52              4,862      3.51              5,958      3.90             5,637        4.10                 6,271      3.36
        Debt securities:
                  Taxable                                             406,488    2.43              385,431    2.37              389,505    2.34             368,349      2.27                 295,608    2.17
                  Tax-exempt (2)                                      128,201    3.27              131,478    3.34              133,590    3.38             132,578      3.45                 134,748    3.54
                             Total securities (3)                     534,689    2.63              516,909    2.62              523,095    2.60             500,927      2.58                 430,356    2.60
        Federal funds sold                                            143,905    1.40              111,175    1.35              98,598     1.17             234,460      0.90                 242,211    0.62
        Restricted equity securities                                  1,030      1.93              1,030      3.47              1,030      10.51            1,030        1.57                 3,042      8.24
        Interest-bearing balances with banks                          310,289    1.31              118,510    1.27              109,909    1.04             295,648      0.80                 601,143    0.55
        Total interest-earning assets                         $       6,713,331  4.29 %    $       6,192,952  4.37 %    $       5,972,545  4.30  %    $     6,041,957    4.03    %    $       5,985,932  3.77 %
Non-interest-earning assets:
        Cash and due from banks                                       68,444                       65,457                       68,894                      59,697                            55,593
        Net premises and equipment                                    57,320                       54,727                       49,813                      44,739                            30,421
        Allowance for loan losses, accrued
                  interest and other assets                           149,636                      151,786                      143,286                     138,289                           140,721
                             Total assets                     $       6,988,731            $       6,464,922            $       6,234,538             $     6,284,682                 $       6,212,667
Interest-bearing liabilities:
        Interest-bearing deposits:
        Checking                                              $       899,334    0.46 %    $       800,437    0.42 %    $       779,916    0.39  %    $     789,273      0.38    %    $       735,115    0.37 %
        Savings                                                       49,697     0.31              48,313     0.30              48,150     0.30             50,461       0.33                 51,845     0.32
        Money market                                                  3,065,298  0.80              2,774,061  0.74              2,567,817  0.64             2,694,225    0.58                 2,669,513  0.56
        Time deposits                                                 576,010    1.16              546,020    1.10              537,220    1.06             530,000      1.02                 527,100    1.00
                  Total interest-bearing deposits                     4,590,339  0.77              4,168,831  0.72              3,933,103  0.64             4,063,959    0.60                 3,983,573  0.58
        Federal funds purchased                                       271,248    1.37              282,806    1.34              336,344    1.11             359,747      0.86                 353,029    0.63
        Other borrowings                                              60,829     4.98              55,034     5.17              55,130     5.22             55,239       5.26                 55,315     5.16
        Total interest-bearing liabilities                    $       4,922,416  0.86 %    $       4,506,671  0.81 %    $       4,324,577  0.74  %    $     4,478,945    0.68    %    $       4,391,917  0.64 %
Non-interest-bearing liabilities:
        Non-interest-bearing
                  demand                                              1,444,338                    1,363,207                    1,338,514                   1,254,496                         1,289,448
        Other liabilities                                             22,030                       15,070                       13,739                      16,809                            14,399
        Stockholders’ equity                                          599,754                      578,626                      556,521                     535,232                           514,245
        Unrealized gains on securities and
                  derivatives                                         193                          1,348                        1,187                       (800      )                       2,658
                             Total liabilities and
                                        stockholders’ equity  $       6,988,731            $       6,464,922            $       6,234,538             $     6,284,682                 $       6,212,667
Net interest spread                                                              3.43 %                       3.56 %                       3.56  %                       3.35    %                       3.13 %
Net interest margin                                                              3.66 %                       3.77 %                       3.77  %                       3.53    %                       3.30 %
(1    ) Average loans include loans on which the accrual of interest has been discontinued.
(2    ) Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 35%.
(3    ) Average net unrealized gains or losses on available-for-sale debt securities are excluded from the yield calculation.

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